And the bleeding goes on...

There are some 90,000,000 residential housing units in the United States all

of the Wall Street darling "experts"... S&P Case Shiller, RealtyTrac, Trullia, Zillow, etc.

somewhat agree that the number of homes CURRENTLY underwater is 23%... as a

percentage "not awful".... but in a real number it is 20,700,000 homes in trouble...

For the better part of three years I have warned that these very same "experts", who

at that time estimated the number of problem loans to be around 5-8 million, were

off by a factor approaching 100%... I was wrong... by their own numbers, they

are off by about 150%...

AND, based on my no less expert analysis the number actually, currently underwater

or in trouble is closer to 25,000,000... then add that to the number that have already

been foreclosed upon or sold as a short sale, and when this is done we will have run

through over 50,000,000 homes... 50 million families devastated... ah, but Wall Street is

doing just fine...

HAMP will miss its numbers

The simple facts are: 1) lenders are still DEMANDING homeowners first be no less than 60 days delinquent (a 180 point credit hit). 2) The process takes at least 7 months. 3) even when successful, the modifications put in place are not conducive to long term compliance… just the opposite. 4)IRS code makes it more profitable for lenders NOT to cooperate, and foreclose on homes…

There are no less than another 3-4 million Option ARMS (100% of the WaMU, Wachovia and Downey portfolio’s) that are underwater… cannot remotely be refinanced. with modification being the ONLY answer… Case Shiller, RealtyTrac and the rest of the “experts” are off by a factor approaching 100%… by the time that this bloodbath ends, in no less that 3-5 years, 23-25 million homeowners will have been devastated…

What don't I understand... Hillary Clinton immediately blamed mortgage brokers for the economic free fall... Those sub-prime loans the mortgage brokers created were responsible for the crash... they stole the equity from poor innocent unsuspecting buyers and homeowners... Little or no down payment, interest only loans, less than perfect credit... They made loans to people who should not have been buying homes... Right... So, please explain the following:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance*
• No appraisal fees
• Also eligible for HomePath Renovation Mortgage
  
• HomePath Mortgage financing is available.

"....In addition, first-time home buyers can now use the $8,000 federal tax credit to help cover a down payment and other upfront costs if they are taking out a loan backed by the Federal Housing Administration...." The above is from Fannie Mae HomePath in selling off the REO properties that it owns... Do I smell a rat or what... are these guidelines even more onerous that the sub-prime loans... What don't I understand....

Go figure!!!

Explain this to me please.... congress and the media blamed the mortgage industry for writing what was called sub-prime financing... to people with feces for credit and little or no cash in the transaction... and then blame mortgage brokers for the entire melt down... and soooooo here we go to the Fannie Mae HomePath web site... seems that they have those REO's to sell off...
http://www.fanniemae.com/homepath/financing/index.jhtml

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance*
• No appraisal fees
• Also eligible for HomePath Renovation Mortgage
  
• HomePath Mortgage financing is available from a variety of lenders...

Guess when the government does it all is good... do as I say not as I do...

What am I missing?

Ex-Leaders of Countrywide Profit From Bad Loans

I wrote on February 18, 2008... warning that this would occur...from the NY Times...
"Ex-Leaders of Countrywide Profit From Bad Loans"
http://www.nytimes.com/2009/03/04/business/04penny.html?_r=1&emc=eta1

The Housing and Economic Reform Act as well as EESA gave the Treasury
Secretary UNLIMITED, UNFETTERED authority to do with as he saw fit with the asset being purchase by the government... didn't anyone in congress read and, heaven forbid remotely understand what they were voting for... what they were giving away... this can and ought to be, but so long as there are lobbyist and campaign contributions will never be corrected...

Without proper loan modification, prior to any sale of the assets,... there will be a surge of foreclosures that may just make what we have already gone through seem like a day at the beach...

Many government official, and all of their "experts" have stated that real estate prices are still over valued and need to come down even further... but for whose benefit? I wonder which members of congress and government officials are invested in partnerships and blind funds, following in the footsteps of Stanford L. Kurland... this reeks of the RTC all over again...

This too shall fail...

And from the latest soon to fail government "program" on loan modification...

"They must also fully document income and prove occupancy..."

In my more than 28 years in the mortgage business I don't believe that
I have seen more than a couple of dozen self employed 1040's that would
qualify the client for anything more than food stamps! The tax code is
about to bite these people in the ass... If you want a real estate loan
you must not take legitimate business deductions... thereby paying far
higher income tax... but we aren't raising your taxes!! If we keep or somewhat
lower the tax rates... severely limit or reduce deductions, resulting
in a higher tax bill, have we raised your taxes??!!

If, as the president states there are millions of small business owners...
most of whom files as "Sole Proprietor's... or S-Chapter Corporations (in
effect self employed)... then he has determined that these millions of
Americans are not worthy of any assistance...

It's the Foreclosures Stupid... It's the Foreclosures

Sunday, February 22, 2009

Congress failed to require real, true, viable loan modification in the Housing & Economic Recovery Act as well as EESA and again in the ARRA. "We the People" have now spent or committed to spent some $2 Trillion, with trillions more to come, all without ever having addressed the root cause of this crisis.... the real estate defaults and foreclosures. In addition, proper loan modification WILL eliminate the vast majority of loan defaults that have brought about the massive increase in bankruptcy filings. Should our bankruptcy judges have the authority to modify real estate loans… most probably the answer is yes, however this is and ought to be a separate issue apart from the current economic crisis.

It has been stated that some 58% of loans that have been modified to date are back in default and foreclosure. A review of these loans will reveal that the cause for these failures has been the method of modification... the rate and terms applied in these instances have been a prescription for failure. Therefore, I suggest that congress require that any lender, brokerage, insurance company, or and any other firm that has received TARP or other federal funds, either directly or indirectly; and holds a beneficial interest in an any loan secured by 1-4 unit real estate, either directly or indirectly, be required to offer to modify all real estate loans with less than 3 years remaining to the next rate adjustment along the following lines:

WITHOUT the time consuming, meaningless process of (effectively) re-qualifying for a new loan, the existing loan balance is to be modified into a 50 year amortized loan, with a 5 year reset and an initial rate of 4%. The maximum rate change each 5 years would be +/- 2%; with a 9% lifetime cap. Loans already in default would carry a forbearance agreement added as part of the process.

This method of modification will reduce the loan payment by some 55%; while at the same time preserving the amount due to the lender. The aggregated annual savings of in excess of $150 Billion realized would, most likely, go into savings, pay down revolving debt or be spent fueling the economy through the purchase of goods and services (cars?). All of these options are positive and necessary for a cure to this crisis.

In most instances, this process would eliminate the urge to simply walk away from a property in which the homeowner has no equity. They require a home for their family; and what is better than the one that they already have. This proposal will stabilize not only the real estate and financial markets... but also the lives of these millions of Americans... while at the same time providing the knowledge and hope that, given time, they will regain the lost equity in their homes... the hope and positive attitude that my proposal brings to the table cannot be overlooked.

It is quite easy to verify that the number of families currently effected by this crisis is not, as reported 13 million, but more likely over 25 million real estate loans are in jeopardy... we cannot continue to ignore these people... as to stay on the present course, impacts every American family negatively.

Every time a homes sells as an REO or "Short Sale" the real estate tax base is reduced... the states and local governments are all reeling from these loses. This plan will put an end to this hemorrhage in tax revenue too.